The Global Trade Slowdown: Nominal or Real?

Abstract

This paper revisits the contemporary debate on the deglobalization of merchandise trade using a new dataset that captures changes in the price structure of manufacturing trade associated with the decline in prices of information technology (IT) equipment. There is strong evidence that continued growth in world trade, both in absolute (value) terms and relative to GDP, has remained obscured by the frequent reliance on trade measured at current rather than constant prices. Continuing downward adjustment in the prices of manufactures trade within GVCs has significantly reshaped the price structure of global trade. When appropriately measured in real terms, there is strong evidence that world trade has regained its upward trend following the significant dip during the GFC owing to the dynamism of trade rooted in global production sharing.